IMF Managing Director Rodrigo de Rato promised in a speech at the Center
this week that the planned increase in voice and representation of developing countries at the IMF would cover the poorest members - most of which are in sub-Saharan Africa - and not just the “emerging market economies”. (The latter group includes most prominently China and Korea, whose shares in the global economy and in trade far exceed their quota shares and voting rights at the IMF - and whose high reserves and in the case of Korea sour memories of IMF pressure during the 1997-98 Asian financial crisis, mean they will no longer tolerate their absence from the corridors of power at the Fund.) De Rato said for the poorest countries the mechanism to increase their votes would be an increase in the proportion of “basic votes” at the IMF - the equal and minimal number every member receives independent of its size. Those “basic votes” constituted 11.3 percent of all votes at the Fund’s founding in 1946, when there were 45 members, but as more members were added and other adjustments were made, constitute just 2.1 percent today
(pdf) for 184 members.
Three questions are worth asking:
First, regarding “voice” independent of “votes”. Will the proposed increase in poor country representation include an increase in the number of Board chairs? The idea of adding two chairs for Africa (currently 48 African members are represented in just two chairs, while Europe occupies 5 chairs) has been discussed for well over a year at the World Bank and was proposed in the 2005 CGD working group recommendations
to President Wolfowitz at the Bank. And would that addition be contingent on Europe consolidating its representation and giving up two chairs - as many including Ted Truman of IIE have proposed
Second, regarding “votes. What percent of total votes is the minimum that all low-income countries ought to have, in practical terms, to create even a faint possibility of effective coalition building among groups of countries on specific IMF issues? For example, on the messy question of whether the IMF allows aid-dependent countries enough fiscal space to spend “enough” on basic health care
, what is the minimum amount of votes that would make the views of aid-dependent countries relevant - and if not for practical purposes, then for “legitimacy” in a democratic age?
Third, regarding the purported two-phased approach (which de Rato did not describe). Will the first stage - probably bringing some increase in the shares of the most underrepresented countries (China, Korea, Mexico, Turkey) and probably to be agreed at the Singapore meeting - be a true “interim” change or will agreement on this change take the wind out of the sails of the “democracy” and “legitimacy” objective for poor countries’ engagement at the IMF which UNDP Administrator Kemal Dervis has invoked
and to which de Rato boldly (if carefully) hinted in his speech?